Argentina’s Bioceres Crop Solutions Corp is eyeing an agricultural boom in its home nation as Argentine President Javier Milei seeks to deregulate the economy and unleash the free market.
Milei devalued Argentina’s peso by 54 percent when he took office in December last year, boosting revenues for farmers whose soybean, corn and wheat sales are linked to the US dollar. The boon increases the likelihood they will invest in the seeds, pesticides and fertilizers sold by agribusiness companies like Bioceres.
“There’s a direct increase in farmers’ purchasing power,” Bioceres chief executive officer Federico Trucco said in an interview after the company posted quarterly earnings on Thursday that topped analysts’ estimates.
Photo: Reuters
“And when farmers go from a defensive mindset to one where they’re looking to maximize production, they invest in more technology and more precise technology like ours — and we can see that partly reflected in our earnings,” Trucco said.
Beleaguered Argentine growers plagued by years of heavy taxation, export meddling and government hostility have supported Milei’s free-market platform in a bid to catch up to rivals in the US and Brazil.
The farmers hoarded harvests over the past few years, betting the government would have to loosen its grip on an exchange rate it tightly controlled to quell fast inflation.
The strong peso also hurt corporate balance sheets, including at Bioceres, since sales tied to the US dollar trailed consumer price index-linked salaries and other costs.
The situation on both fronts is improving after Milei’s devaluation, but Trucco nevertheless voiced concern about the exchange rate becoming overvalued again.
“We’re a global company with all our revenues in dollars, but a part of our cost structure is in pesos, so the devaluation has made us more competitive from Argentina,” he said. “Sustaining that competitiveness depends on the advantage created by the devaluation continuing in time and inflation not eroding it over the coming months.”
Argentine agriculture company Cresud SA said it was also optimistic for the Milei era in an earnings call on Friday as the peso devaluation and fewer currency controls combine with better weather, bolstering farmer balance sheets across the Pampas growing belt.
“Milei is trying to change many pockets of the country and all kinds of distortions in the market, so we think farmers are going to be much better,” Cresud CEO Alejandro Elsztain said.
Farmer sentiment toward Milei soured slightly after he tried to hike export taxes as he prioritized balancing the government’s books over other issues. Nevertheless, Bioceres still sees good times ahead for Argentine growers.
“There’s an emotional side to this, which is going from a government that treated you badly to one that treats you a bit better,” Trucco said. “And I believe that a positive mood translates into action: farm-input purchases and planting more acreage.”
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